BP divest from green energy, raise oil and gas spending

Once bullish on green energy, BP have announced a significant reduction in spending on green energy in conjunction with a massive boon to their fossil fuel business. Jed Thomas 

BP’s dramatic pivot back to oil and gas marks yet another chapter in the volatile relationship between energy giants, market forces, and the global climate crisis.  

In what has been described as a shocking strategy U-turn, the British supermajor has abandoned its once-ambitious green energy transition, slashing investment in renewables by more than $5 billion annually while ramping up fossil fuel production to as much as 2.5 million barrels per day by 2030.  

The move, heavily influenced by activist investors like Elliott Management, signals a retreat from climate commitments in favor of short-term shareholder returns. 

As we enter the final half of what the IPCC has called the crucial decade for climate action, what does BP’s pivot signify? 

From leaders of the transition to short-termism 

A little over five years ago, BP positioned itself as a leader among oil majors in transitioning to clean energy.  

Under former CEO Bernard Looney, the company pledged to cut fossil fuel production by 40% and invest heavily in renewables. However, the tide began turning in 2023, when BP first lowered its emission reduction targets and scaled back on wind energy projects.  

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Now, under the leadership of CEO Murray Auchincloss, BP has fully embraced a return to its oil and gas roots, prioritizing ‘high-margin energy’ and ‘long-term shareholder value’ over environmental responsibility. 

The decision follows a broader industry trend, with Shell and Equinor also pulling back from green energy investments. BP’s announcement underscores the growing influence of hedge funds and investor activism in dictating corporate strategy, especially when short-term profitability is at stake.  

With oil prices stabilizing at profitable levels, BP sees fossil fuels as a safer bet than the uncertain returns of renewable energy investments. 

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Did investors want BP to ditch green energy? 

At the heart of BP’s reversal is pressure from shareholders, particularly Elliott Management, which has taken a near £4 billion stake in the company. BP’s net income fell from $13.8 billion in 2023 to $8.9 billion in 2024, creating further pressure to prioritize financial sustainability over ecological commitments.  

Analysts argue that BP’s renewable investments were struggling to deliver the kind of returns that fossil fuels guarantee in the short term.  

Elliott and other institutional investors have pushed BP to focus on high-margin projects, leading to cost-cutting in its net-zero transition businesses by nearly £4 billion per year. 

A changing climate 

BP’s increased investment in oil and gas also aligns with the broader geopolitical and economic landscape.  

With U.S. presidential candidate Donald Trump once again promising an oil boom under his “drill, baby, drill” agenda and European energy security concerns following Russia’s invasion of Ukraine, oil majors see a more favorable climate for fossil fuel expansion than they did five years ago. 

Critics of Western transition policy, like Professor Brett Christophers, have suggested that the design of wholesale energy markets can render renewables massively unprofitable.  

Perhaps, we are now seeing that further interventions will be needed besides simple price-based competition to stop the burning of fossil fuels.  

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Has there been a backlash? 

BP’s retreat from renewables has provoked outrage from environmental groups, sustainability-focused investors, and climate activists.  

Global Witness criticized the move as an abandonment of corporate responsibility, with campaigner Alexander Kirk calling it “a betrayal of the planet.”  

Greenpeace has renewed calls for fossil fuel corporations to be held financially accountable for climate-related disasters, while advocacy groups like ShareAction warn of potential legal and reputational risks for BP in walking back its commitments. 

There is also growing political momentum behind the idea that companies profiting from fossil fuel-driven climate disasters should be required to contribute to recovery efforts.  

Some policymakers in the U.S. and Europe have proposed climate reparations funded by oil giants, and BP’s decision to double down on fossil fuels could increase regulatory scrutiny in the coming years. 

Is this the new normal? 

BP’s pivot raises broader questions about the feasibility of a corporate-led energy transition: if the world’s largest energy companies are unwilling to sustain investments in renewables, who will?  

As a result, the assumption that the private sector will drive the transition to clean energy is increasingly being called into question. Industry leaders like BP have shown they will prioritize green investments only when they are profitable, which, in today’s economic landscape, appears to be a distant prospect. 

For now, BP is betting on oil and gas to secure its financial future. But in doing so, it risks deepening the global climate crisis and undermining long-term sustainability efforts.  

With mounting pressure from both sides—investors demanding returns and environmentalists demanding accountability—the question remains: will BP’s strategy reset be remembered as a savvy financial move or as a disastrous retreat from responsibility? 

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